Mumbai, Feb 13: The members of the LC Gupta committee on introduction of derivatives trading in the country, including its chairman, are miffed with the delay in the finalisation of the report.It is learnt that the chairman of the committee, LC Gupta, wrote a hard-hitting letter to the committee members just before submitting the first part of the report saying that the report has been considerably delayed and that if any member has any dissent on the recommendations so far, he should indicate the same.
He also set a deadline of February 6 for all members to respond failing which the report would be submitted. In his letter to the members, Gupta said that BSE president MG Damani had furnished a dissent note to the committee, saying that the country was not ready for derivatives trading.
Damani had also written that the main task of the committee was to prepare exchange-level rules and regulations. This was, however, strongly contended by Gupta who said that this was a "misrepresentation" of thecommittee's mandate.
Such rules and regulations should be prepared by the concerned exchanges and then sent to Sebi for its approval, he said. The exchange-level rules and regulations are concerned with administrative rules and procedural matters and have to be in conformity with the report. Once the report is released to the public, the regulator can put in place such rules and regulations, Gupta is believed to have told the members. Some committee members were of the opinion that an unwieldy committee of 20-plus members should not get into framing regulations. This would only further delay the finalisation of the report.
As a result of this, Sebi has decided to frame the regulations on its own. It has also decided to finalise the report in the next 10 days and send it back to the Gupta committee. It is learnt that the flak that the committee has been receiving from the public and media on the delay in submitting its report has been responsible for the frustration among the members.
The LC Guptacommittee submitted its report to Sebi on Monday this week. However, Sebi is now putting in place the regulations which would be incorporated in the committee's recommendations. In fact, some committee members are blaming Sebi solely for the delay. "The committee had been set up to lay down the policy framework for the introduction of derivatives trading in India. Just when the committee was about to conclude its recommendations, it was asked by Sebi to also frame the bye-laws and other regulations," said a source.
In fact, one such meeting was intended to be the last of the lot and Sebi had even gone to the extent of inviting the media for a release of the report. At this meeting, however, Damani raised some fresh issues pertaining to allowing brokers to head the governing board of the derivatives segment of the exchange.
"Suddenly, the perception changed and we were asked to get into the process of defining the bye-laws and look into the regulatory aspects as well. This was obviously going to delay theprocess even further," said a New Delhi-based committee member. The committee has, in its final report, decided not to accede to Damani's request, prompting him to submit a dissent note. A senior Sebi offical when contacted said that Sebi has received the report and would, withregulations back to the committee.
"When there are so many people whose views are to be sought there is bound to be a delay. But now we are at the threshold of completing the report," said the official. "We wanted to be sure that we do not go wrong and hence the cautious approach," the official added. Committee members however feel differently. "The existing regulatory framework is quite sufficient to monitor derivatives trading. Exchanges are by definition regulated by Sebi and since derivatives trading in India is going to be exchange-based there is no real need to have a separate regulatory framework," opined a committee member.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
